Miss Chaya Murthy D/o Late V K Murthy , Bangalore V. Deputy Commissioner of Income Tax Circle-5(2)(1), Bangalore

ITA 2824/BANG/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7395 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-06-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 11-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K.N.DHANDAPANI
• Keywords: Additional evidence; Cost of acquisition; Valuation report; Set aside; Capital Gains
• Section: 54; 154; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER I TA NO. 2824 /BANG/201 8 ASSESSMENT YEAR : 20 15 - 16 MS. CHAYA MURTHY, D/O. LATE V.K. MURTHY, NO. 1/6, 10 TH A CROSS, GH LAYOUT, LIC COLONY, JAYANAGAR 3 RD BLOCK EAST, BANGALORE 560 004. PAN: AHDRC4706F VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 5 (2) (1), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SMT. SUMAN LUNKAR, CA REVENUE BY : SHRI K.N. DHANDAPANI, JCIT (DR) DATE OF HEARING : 10 .0 6 .2019 DATE OF PRONOUNCEMENT : 19 .0 7 .2019 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-5, BANGALORE DATED 27.07.2018 FOR ASSESSMENT YEAR 2015-16. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE APPELLANT DENIES HERSELF LIABLE TO BE ASSESSED AT INR 9,75,71,240/- AS AGAINST THE OFFERED INCOME OF RS. 8,79,88,290/- 2. THE ORDERS PASSED BY THE LEARNED ASSESSING OFFICER AND LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ARE CONTRARY TO THE FACTS AND CIRCUMSTANCE OF THE CASE. THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS) WERE NOT JUSTIFIED IN DENYING EXEMPTION UNDER SECTION 54 OF THE ACT TO THE APPELLANT WHEN ALL THE CONDITION AS LAID DOWN IN THE SAID SECTION HAS BEEN FULFILLED. 3. THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS) WERE NOT JUSTIFIED IN CONCLUDING THAT THE EXEMPTION OF ONLY ONE RESIDENTIAL UNIT TO BE GIVEN WHEREAS THE TWO RESIDENTIAL UNITS BEING ADJACENT FLATS TO EACH OTHER AND FUNCTIONING AS ONE SINGLE RESIDENTIAL HOUSE SHOULD BE CONSIDERED AS A RESIDENTIAL HOUSE. 4. IN ANY CASE AND WITHOUT PREJUDICE THE AUTHORITIES, BELOW HAVE ERRED IN ALLOWING THE DEDUCTION CLAIMED U/S. 154 OF THE ACT TO THE EXTENT OF ITA NO. 2824/BANG/2018 PAGE 2 OF 5 1/3 RD SHARE HOLDING THAT THE PROPERTY IS REGISTERED IN THE NAME OF 3 DIFFERENT PERSONS. ON PROPER APPRECIATION OF FACTS OF THE CASE AND THE LAW APPLICABLE THE ENTIRE PURCHASE CONSIDERATION WAS PAID BY THE APPELLANT AND THE NAMES MENTIONED IN THE SALE DEEDS ARE ONLY FOR SECUTIRY PURPOSES. THUS THE ACTION OF AUTHORITIES BELOW IN RESTRICTING THE DEDUCTION TO 1 /3RCL THAT TOO WITH RESPECT ONE RESIDENTIAL PROPERTY IS WHOLLY ERRONEOUS IS TO BE NEGATED AND THE APPELLANT BE ALLOWED ENTIRE DEDUCTION U/S 54 OF THE ACT AS CLAIMED BY HER. . 5. THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS)FAILED TO APPRECIATE THAT THE MANDATE OF THE SECTION 54 WAS ONLY RE-INVESTMENT AND NOWHERE THE SECTION PRESCRIBES THAT IT HAS TO BE IN THE NAME OF THE APPELLANT 6. THE APPELLANT CRAVES LEAVE OF THIS AUTHORITY TO ADD, DELETE SUCH GROUNDS AS MAY BE NECESSARY AT THE TIME OF HEARING. 7. FOR THE FACTS STATED AND GROUNDS URGED, THIS HONBLE AUTHORITY BE PLEASED TO SET ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER AND THE APPELLANT ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) FOR THE ASSESSMENT YEAR 2015-16 IN THE INTEREST OF JUSTICE AND EQUITY OR AT LEAST THE APPELLANT BE ALLOWED THE DEDUCTION U/S. 54 OF THE ACT AS CLAIMED FOR. 3. PARA NOS. 5 AND 6 OF THE ORDER OF LD. CIT(A) ARE RELEVANT REGARDING ITS DECISION ON THIS ISSUE AND HENCE, FOR READY REFERENCE, THESE PARAS ARE REPRODUCED HEREINBELOW. 5. I HAVE CONSIDERED THE ABOVE GROUNDS OF APPEAL, STATEMENT OF FACTS AND WRITTEN SUBMISSIONS FILED BY THE APPELLANT AND ALSO. PERUSED THE ASSESSMENT ORDER. THE APPELLANT IS A DISABLED UNMARRIED LADY AGED 59 YEARS PRESENTLY TAKEN CARE OF BY CARETAKERS. IN THE YEAR UNDER CONSIDERATION THE APPELLANT ALONG WITH HER LATE FATHER SRI V.KRISHNAMURTY ALIAS VK MURTHY HAD ENTERED INTO AN AGREEMENT TO SELL THE PROPERTY BEARING NO. 52 (OLD NO. 36), RANGE RAO ROAD, MUNICIPAL WARD NO.49 OF K.G.NAGAR, SHANKARPURAM, BANGALORE, ON OCTOBER 24, 2013 WHEREIN SHE HAD AGREED TO JOIN THE EXECUTION OF THE AGREEMENT TO SELL ONLY AS A CONFIRMING PARTY. SUBSEQUENT TO THE EXECUTION OF THE SAID AGREEMENT TO SELL, SHRI V.K. MURTHY DIED INTESTATE ON APRIL 7, 2014. AS THE APPELLANT IS THE ONLY DAUGHTER AND THE LEGAL HEIR OF HER DECEASED FATHER, THE APPELLANT SUCCEEDED TO THE ESTATE LEFT BEHIND BY HER FATHER INCLUDING THE PROPERLY MENTIONED ABOVE. THE APPELLANT SOLD THE ABOVE MENTIONED PROPERTY ON MAY 12, 2014 FOR SALE CONSIDERATION OF RS.11,00,00,000/-. PURSUANT TO THE DEATH OF THE APPELLANTS FATHER, THE APPELLANT HAD BECOME THE ABSOLUTE OWNER AND THE KHATA CERTIFICATE ALSO STOOD TRANSFERRED TO HER NAME. THE ASSESSING OFFICER DURING THE SCRUTINY PROCEEDINGS HAS RAISED THE OBJECTION THAT SHE HAD CLAIMED EXEMPTION U/S 54 OF THE ACT THOUGH SHE PURCHASED TWO RESIDENTIAL HOUSES ON 15 FEBRUARY 2014. HOWEVER, AS PER THE INCOME TAX ACT, THE EXEMPTION IS AVAILABLE FOR THE PURCHASE OF ONLY ONE RESIDENTIAL HOUSE. ITA NO. 2824/BANG/2018 PAGE 3 OF 5 THE APPELLANT SUBMITTED THAT HER FATHER HAD PURCHASED RESIDENTIAL PROPERTIES ON FEBRUARY 15 2014 AMOUNTING TO RS. 68,34,300/- AND RS. 75,40,120/- WHICH WERE REGISTERED IN THE NAME OF THE APPELLANT'S FATHER AND MS. NALINI VASUDEV 8. MR. VISHNU RANED. SUCH ADDITION OF NAMES APART FROM THE APPELLANT'S FATHER WAS DONE ONLY FOR SECURITY PURPOSE OF THE APPELLANT. ALSO, SUCH RESIDENTIAL PROPERTIES THOUGH BEARING TWO DIFFERENT FLAT NUMBERS ARE ONE RESIDENTIAL UNIT I.E. ONE RESIDENTIAL HOUSE SINCE THE COMMON WALL SEPARATING THE TWO FLATS ARE NON-EXISTENT FROM THE DATE OF PURCHASE. THE TWO FLATS ADJACENT TO EACH OTHER FUNCTION AS ONE SINGLE RESIDENTIAL HOUSE AND NOT TWO RESIDENTIAL PROPERTIES. HENCE, FOR THE PURPOSE OF THE ABOVE OBJECTION RAISED, THE CLAIM OF THE APPELLANT THAT THE TWO FLATS ARE ONE RESIDENTIAL HOUSE SHOULD BE CONSIDERED. SHE RELIED ON CIT VS. D. ANAND BASAPPA [2009] 309 ITR 329-HIGH COURT (HC) OF KARNATAKA. FURTHER THE ASSESSING OFFICER HAS RAISED ANOTHER OBJECTION THAT SHE HAD CLAIMED THE SHARE OF HER FATHER ALSO WHICH IS NOT ALLOWED AS PER THE PROVISIONS OF THE LAW FOR WHICH THE APPELLANT SUBMITTED THAT SHE AND APPELLANT'S FATHER FOR THIS PARTICULAR CASE SHOULD BE TREATED ON PAR AND AS ONE PERSON/ASSESSEE SINCE SHE IS THE LEGAL HEIR. THE PROPERTIES BEARING FLAT NUMBERS GF-1 THOUGH IN THE NAME OF LATE MR. V.K. MURTHY, MS. CHAYA MURTHY & MR. VISHNU RANED AND GF-2 THOUGH IN THE NAME OF LATE MR. V.K.MURHTY. MS CHAYA MURHTY & MS.NALINI VASUDEV THE PROPERTY PURCHASED WAS DONE BY LATE MR. V.K. MURTHY. THE MONEY HAS FLOWN DIRECTLY FROM THE BANK ACCOUNTS OWNED BY HIM SINCE SUCH MONEY HAS FLOWN FROM THE APPELLANT'S FATHER ONLY, THE EXEMPTION CLAIM U/S. 54 SHOULD BE IN FULL AND NOT PARTLY AS CLAIMED BY APPELLANT IN THE INCOME TAX RETURN (SHARE OF FATHER AND APPELLANT) AND NOT RESTRICTED TO ONLY APPELLANT'S SHARE AS CLAIMED IN THE SCRUTINY ASSESSMENT. IT IS ALSO TO BE NOTED THAT THE PURPOSE OF ADDING THE ADDITIONAL NAMES IN THE PROPERTIES APART FROM THE FATHER AND DAUGHTER WAS FOR HER SECURITY PURPOSES. PLACED RELIANCE ON THE FOLLOWING CASE LAWS IN SUPPORT OF HER CLAIM: DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATION AND OTHER VS. MRS JENNIOFER BHIDE (IN INCOME TAX ACT 1961 NO.169/2011, ORDER DATED 26/09/2011) REPORTED IN 203 TAXMAN 208-KARNATAKA HC (ANNEXURE 10). 5.1 FURTHER SUBMITTED THAT THE EXEMPTION CLAIMED UNDER SECTION 54 OF THE ACT SHOULD BE IN FULL AND NOT PARTLY AS CLAIMED BY THE APPELLANT IN THE INCOME TAX RETURN (SHARE OF FATHER AND APPELLANT) AND ALSO SHOULD NOT BE RESTRICTED TO ONLY APPELLANT'S SHARE AS CLAIMED BY THE ASSESSING OFFICER. IT WAS THUS REQUESTED TO ALLOW FULL CLAIM OF THE PROPERTIES PURCHASED TO RS. 68,34,300/- AND RS. 75,40,120/- WHICH AMOUNTS TO A TOTAL OF RS. 1,43,74,420/- AS AGAINST A PREVIOUS CLAIM OF RS. 95,82,947/, 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND PERUSED ALL THE COPIES OF THE DOCUMENTS SUCH AS DEATH CERTIFICATE, AGREEMENT TO SELL, SALE DEED AND THE CASE LAWS RELIED ON BY THE APPELLANT. THERE IS NO DISPUTE ON THE COST OF ACQUISITION AS IT WAS TAKEN AS PER VALUATION REPORT. HOWEVER IT SEEN FROM THE FACTS OF THE CASE THAT ITA NO. 2824/BANG/2018 PAGE 4 OF 5 THERE ARE TWO FLATS GF1 AND GF2 IN THE NAMES OF LATE MR. V.K.MURHTY, MS. CHAYA MURHTY & MS NALINI VASUDEV. THE ASSESSING OFFICER HAS TAKEN THE TOTAL INVESTMENTS IN BOTH THE FLATS AND HAS ALLOWED 1/3 RD OF THE DEDUCTION U/S. 54 OF THE ACT ONLY SINCE THEY ARE IN THE NAMES OF THREE PERSONS AS PER THE SALE DEEDS AND COMPUTED TOTAL TAXABLE CAPITAL GAINS AT RS.9,25,86,239/- AS AGAINST THE CAPITAL GAINS DECLARED OF RS,8,39,26,861/-. AS SUCH THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE ASSESSING OFFICER SINCE THE SALE DEEDS ARE IN THE NAMES OF THREE PERSONS, THE ASSESSING OFFICER HAS RIGHTLY ALLOWED 1/3 RD OF THE CLAIM U/S. 54 OF THE ACT. THE GROUNDS OF APPEAL ARE NOT ALLOWED. 4. THE LD. AR OF ASSESSEE SUBMITTED SOME ADDITIONAL EVIDENCES BEING COPY OF AFFIDAVIT FROM CARETAKERS OF ASSESSEE SRI VISHNU RANED AND SMT. NALINI VASUDEV, COPY OF RELEVANT BANK PASS BOOK AS EVIDENCE. REGARDING RECEIPT OF SALE CONSIDERATION AND PURCHASES U/S. 54, COPY OF CERTIFICATE FROM CHARTERED ENGINEER TO THE EFFECT THAT BOTH THE FLATS HAVE ACCESS TO EACH OTHER AND THE COMMON WALL BETWEEN TWO FLATS HAS BEEN BROKEN AND COPY OF CERTIFICATE TO THE EFFECT THAT THE APPELLANT IS BOTH PHYSICALLY AND MENTALLY CHALLENGED. SHE SUBMITTED THAT THESE DOCUMENTS ARE ESSENTIAL TO DECIDE THE ISSUE IN DISPUTE AND HENCE, THE SAME SHOULD BE ADMITTED AS ADDITIONAL EVIDENCE. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF LD. CIT(A) AND HE SUBMITTED THAT ADDITIONAL EVIDENCE SHOULD NOT BE ADMITTED AT THIS STAGE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IT IS NOTED BY LD. CIT(A) IN PARA NO. 6 OF HIS ORDER REPRODUCED ABOVE THAT THE AO HAS TAKEN THE TOTAL INVESTMENTS IN BOTH THE FLATS AND HAS ALLOWED 1/3 RD OF THE DEDUCTION U/S. 54 OF THE ACT. HENCE THIS COMES OUT THAT THIS IS NOT THE DISPUTE THAT WHETHER DEDUCTION IS ALLOWABLE FOR ONE HOUSE OR TWO HOUSES PURCHASED BECAUSE THE AO HIMSELF HAS ALLOWED DEDUCTION IN RESPECT OF BOTH HOUSES BUT IN FACT, THE AO HAS ALLOWED DEDUCTION TO THE EXTENT OF 1/3 RD OF THE TOTAL INVESTMENT IN THESE TWO HOUSES WHEREAS THE CLAIM OF THE ASSESSEE IS THIS THAT IT SHOULD BE ALLOWED IN FULL AND NOT 1/3 RD . IN THIS REGARD, IT IS SEEN THAT IT IS NOTED BY LD. CIT(A) IN PARA 5 OF HIS ORDER AS REPRODUCED ABOVE THAT THIS WAS THE SUBMISSION BEFORE HIM THAT THE ASSESSEES FATHER HAS PURCHASED RESIDENTIAL PROPERTIES ON 15.02.2014 AMOUNTING TO RS. 68,34,300/- AND RS. 75,40,120/- WHICH WERE REGISTERED IN THE NAME OF THE ASSESSEES FATHER AND MS. NALINI VASUDEV AND MR. VISHNU RANED. IT IS ALSO SUBMITTED BEFORE LD. CIT(A) THAT SUCH ADDITION OF NAMES APART FROM ASSESSEES NAME WAS DONE ONLY FOR SECURITY PURPOSE OF THE ASSESSEE. WHATEVER BE THE REASON FOR ADDING THESE TWO NAMES, IT IS ITA NO. 2824/BANG/2018 PAGE 5 OF 5 ADMITTED POSITION THAT THE ASSESSEES FATHER DURING HIS LIFE TIME AND AFTER HIS DEATH, THE ASSESSEE IS ONLY 1/3 RD OWNER OF THESE TWO FLATS PURCHASED ON 15.02.2014. AS PER THE REQUIREMENT OF SECTION 54., THE ASSESSEE HAS TO EITHER PURCHASE WITHIN ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE OF SALE OR HAVE TO CONSTRUCT WITHIN 3 YEARS AFTER DATE OF SALE, A RESIDENTIAL HOUSES AND THEN THE DEDUCTION IS ALLOWABLE. WHEN THE ASSESSEE IS ONLY 1/3 RD OWNER OF THE FLATS PURCHASED, THE ASSESSEES CLAIM FOR DEDUCTION FOR THE ENTIRE AMOUNT OF PURCHASES DOES NOT STAND TO LOGIC. REGARDING THIS ARGUMENT THAT TWO ADDITIONAL NAMES WERE INCLUDED FOR SECURITY PURPOSE ONLY, WE WOULD LIKE TO OBSERVE THAT BECAUSE OF THIS REASON THAT THE ASSESSEE WAS A DISABLED UNMARRIED LADY AND THESE TWO PERSONS WERE TAKING HER CARE, 1/3 RD PORTION OF THESE TWO FLATS MIGHT HAVE BEEN PURCHASED IN EACH OF THEIR NAMES TOWARDS CONSIDERATION FOR THEIR SERVICES. BE IT AS IT MAY BUT THIS IS ADMITTED POSITION THAT ASSESSEE IS ONLY 1/3 RD OWNER OF THESE TWO FLATS AND THEREFORE, ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 54 TO THE EXTENT OF 1/3 RD OF INVESTMENT IN THESE TWO FLATS ONLY WHICH IS ALLOWED BY AO AND LD. CIT(A) AND THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A). 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 19 TH JULY, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.